A.O. Smith (A.O. Smith) Gross Margin % : 37.43% (As of Dec. 2023)

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Gross Margin % is calculated as gross profit divided by its revenue. A.O. Smith's Gross Profit for the three months ended in Dec. 2023 was $370 Mil. A.O. Smith's Revenue for the three months ended in Dec. 2023 was $988 Mil. Therefore, A.O. Smith's Gross Margin % for the quarter that ended in Dec. 2023 was 37.43%.

Warning Sign:

A.O. Smith Corp gross margin has been in long-term decline. The average rate of decline per year is -1.9%.

The historical rank and industry rank for A.O. Smith's Gross Margin % or its related term are showing as below:

AOS' s Gross Margin % Range Over the Past 10 Years
Min: 35.42 Med: 39 Max: 41.48
Current: 38.54

During the past 13 years, the highest Gross Margin % of A.O. Smith was 41.48%. The lowest was 35.42%. And the median was 39.00%.

AOS's Gross Margin % is ranked better than
78.14% of 2937 companies
in the Industrial Products industry
Industry Median: 26.46 vs AOS: 38.54

A.O. Smith had a gross margin of 37.43% for the quarter that ended in Dec. 2023 => Competition eroding margins

The 5-Year average Growth Rate of Gross Margin for A.O. Smith was -1.90% per year.

A.O. Smith Gross Margin % Historical Data

The historical data trend for A.O. Smith's Gross Margin % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

A.O. Smith Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

Gross Margin %

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39.45

38.28

37.04

35.42

38.54

A.O. Smith Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
Gross Margin %	Get a 7-Day Free Trial															37.24	38.71	40.04	37.99	37.43

Competitive Comparison

For the Specialty Industrial Machinery subindustry, A.O. Smith's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

A.O. Smith Gross Margin % Distribution

For the Industrial Products industry and Industrials sector, A.O. Smith's Gross Margin % distribution charts can be found below:

* The bar in red indicates where A.O. Smith's Gross Margin % falls into.

A.O. Smith Gross Margin % Calculation

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

A.O. Smith's Gross Margin for the fiscal year that ended in Dec. 2023 is calculated as

Gross Margin % (A: Dec. 2023 )	=	Gross Profit (A: Dec. 2023 )	/	Revenue (A: Dec. 2023 )
	=	1484.8	/	3852.8
	=	(Revenue - Cost of Goods Sold)	/	Revenue
	=	(3852.8 - 2368)	/	3852.8
	=	38.54 %

A.O. Smith's Gross Margin for the quarter that ended in Dec. 2023 is calculated as

Gross Margin % (Q: Dec. 2023 )	=	Gross Profit (Q: Dec. 2023 )	/	Revenue (Q: Dec. 2023 )
	=	369.8	/	988.1
	=	(Revenue - Cost of Goods Sold)	/	Revenue
	=	(988.1 - 618.3)	/	988.1
	=	37.43 %

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.

A.O. Smith (NYSE:AOS) Gross Margin % Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

A.O. Smith had a gross margin of 37.43% for the quarter that ended in Dec. 2023 => Competition eroding margins

Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.

A.O. Smith Gross Margin % Related Terms

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A.O. Smith (A.O. Smith) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » A.O. Smith Corp (NYSE:AOS) » Definitions » Gross Margin %

Comparable Companies

Traded in Other Exchanges

3SM:Germany 3SM:Germany

Address

11270 West Park Place, P. O. Box 245008, Suite 170, Milwaukee, WI, USA, 53224-9508

Website

https://www.aosmith.com

A.O. Smith Corporation manufactures and markets comprehensive lines of residential and commercial gas, gas tankless, and electric water heaters. Supplementary products include water heating equipment, condensing and noncondensing boilers, and water system tanks. The company's two operating segments are by geographic region: North America (majority of total revenue) and the Rest of the World. A material portion of sales in North America derive from replacing existing products, and the company utilizes a wholesale distribution channel and multiple selling locations. The Rest of the World segment sells majorly in Asian countries and operates sales offices to expand distribution and market its product portfolio.

Executives

Mark D Smith	director
Idelle K Wolf	director
Robert J Heideman	officer: Senior Vice President Corp Tec	A. O. SMITH CORPORATE TECHNOLOGY CENTER, 12100 WEST PARK PLACE, MILWAUKEE WI 53224
Mark A Petrarca	officer: Vice President - H.R. & P.A.	A. O. SMITH CORPORATION, 11270 WEST PARK PLACE, MILWAUKEE WI 53224
James F Stern	officer: Exec VP, General Counsel & Sec	A. O. SMITH CORPORATION, 11270 WEST PARK PLACE, MILWAUKEE WI 53224
Ajita G Rajendra	officer: President, A. O. Smith Water P	A. O. SMITH WATER PRODUCTS COMPANY, 500 LINDAHL PARKWAY, ASHLAND CITY TN 37015
Kevin J. Wheeler	officer: Senior VP and President & GM	A. O. SMITH CORPORATION, 500 TENNESSEE WALTZ PARKWAY, ASHLAND CITY TN 37015
Benjamin A Otchere	officer: Vice President and Controller	A. O. SMITH CORPORATION, 11270 WEST PARK PLACE, MILWAUKEE WI 53224
Michael M Larsen	director	ILLINOIS TOOL WORKS INC., 155 HARLEM AVE., GLENVIEW IL 60025
Daniel L Kempken	officer: Vice President and Controller	A. O. SMITH CORPORATION, 11270 WEST PARK PLACE, MILWAUKEE WI 53224
Samuel M. Carver	officer: SVP - Global Operations	A. O. SMITH CORPORATION, 44 VANTAGE WAY, NASHVILLE TN 37228
Ronald D Brown	director	2090 FLORENCE AVENUE, CINCINNATI OH 45206
Parag Kulkarni	officer: SVP - Int'l; President India	A. O. SMITH INDIA WATER PRODUCTS PRIVATE, #300, PHASE II, KIADB INDUSTRIAL AREA, KARNATAKA K7 562112
Earl E. Exum	director	A. O. SMITH CORPORATION, 11270 WEST PARK PLACE, MILWAUKEE WI 53224
Stephen D. O'brien	officer: SVP; President, Lochinvar, LLC	LOCHINVAR, LLC, 300 MADDOX SIMPSON PARKWAY, LEBANON TN 37090